Last hope rests with regulator -- Spanish market reform

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The Spanish wind industry's hopes for a reprieve from the harsh pricing regime proposed by government for new and existing wind plant now rests with the country's electricity regulator, Comisión Nacional de Energía (CNE). It is reportedly dead set against the reforms.

An unnamed CNE insider told newspaper La Razón last month that the regulator has completed a damming technical report on the government's intention to cap wind power purchase prices at EUR 84.7/MWh, no matter how high wholesale electricity prices rise, and slash the price subsidy by more than half the current rate (Windpower Monthly, January 2007). Average earnings for wind generators over 2006 were EUR 86/MWh. If the government's reforms are implemented, Spain's booming wind market will come to a halt, the industry warns.

CNE seems to agree. According to La Razón, the CNE source says the restrictions will push operators back into a system of fixed power purchase prices, discouraging wind operators from providing accurate production scheduling and other complimentary services to the electricity system. It will effectively put paid to wind's fast growing role as a mainstream electricity sector player, says the CNE source. The regulator also reportedly backs wind lobby demands that any new rules be applied only to new plant coming online as of January 2008, as stipulated in the existing regulation, which has been in force since 2004.

Like clockwork

"While CNE amendments are not binding, there are few precedents of the government acting against its key recommendations," says Sergio de Otto of national wind association Asociación Empresarial Eólica. With the government scheduled to make its final ruling on March 31, CNE had planned to publish its report on the proposal at the beginning of January. It pushed that date back to the end of the month, at the earliest. "CNE works like clockwork and the postponement is a sure sign it has found major stumbling blocks in the reforms, though we don't know the exact nature of these," says a hopeful de Otto.

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